Dividend spending shares like Group 1 Automotive, Inc. (NYSE:GPI) tend to be popular with buyers, and for very good motive – some investigate suggests a considerable quantity of all stock market returns come from reinvested dividends. On the other hand, traders have been known to acquire a stock for the reason that of its produce, and then get rid of dollars if the company’s dividend would not stay up to anticipations.

A slim .8% yield is tough to get excited about, but the very long payment history is respectable. At the correct price tag, or with solid advancement prospects, Team 1 Automotive could have opportunity. For the duration of the yr, the corporation also done a buyback equal to close to 1.7% of its industry capitalisation. There are a several straightforward means to decrease the challenges of shopping for Team 1 Automotive for its dividend, and we are going to go by these beneath.

Simply click the interactive chart for our full dividend analysis

NYSE:GPI Historic Dividend January 13th 2021

Payout ratios

Firms (ordinarily) fork out dividends out of their earnings. If a firm is shelling out a lot more than it earns, the dividend may possibly have to be slice. So we will need to variety a watch on if a company’s dividend is sustainable, relative to its internet income after tax. Group 1 Automotive paid out out 4.7% of its financial gain as dividends, around the trailing twelve month period. With a lower payout ratio, it appears to be like the dividend is comprehensively covered by earnings.

One more important verify we do is to see if the free hard cash move generated is sufficient to fork out the dividend. Group 1 Automotive compensated out 1.6% of its absolutely free dollars stream as dividends previous year, which is conservative and implies the dividend is sustainable. It is encouraging to see that the dividend is covered by both equally financial gain and dollars flow. This frequently suggests the dividend is sustainable, as very long as earnings do not fall precipitously.

Take into account obtaining our most up-to-date analysis on Group 1 Automotive’s monetary place listed here.

Dividend Volatility

A person of the significant risks of relying on dividend revenue, is the prospective for a organization to battle financially and slash its dividend. Not only is your earnings slice, but the price of your expenditure declines as perfectly – horrible. For the function of this posting, we only scrutinise the final ten years of Team 1 Automotive’s dividend payments. Its dividend payments have declined on at the very least one particular situation more than the previous 10 many years. For the duration of the past 10-year interval, the very first once-a-year payment was US$.4 in 2011, in comparison to US$1.2 last calendar year. Dividends for each share have developed at roughly 12% for each calendar year around this time. The advancement in dividends has not been linear, but the CAGR is a good approximation of the level of improve about this time frame.

Group 1 Automotive has developed distributions at a swift charge in spite of chopping the dividend at the very least once in the earlier. Firms that cut the moment normally minimize yet again, but it might be worthy of thinking of if the enterprise has turned a corner.

Dividend Progress Prospective

Presented that the dividend has been reduce in the earlier, we want to verify if earnings are escalating and if that might guide to stronger dividends in the upcoming. Solid earnings for each share (EPS) expansion may possibly really encourage our fascination in the business in spite of fluctuating dividends, which is why it’s fantastic to see Team 1 Automotive has grown its earnings for every share at 16% for each annum about the past 5 many years. Earnings for each share are increasing at a stable clip, and the payout ratio is reduced. We imagine this is an great combination in a dividend stock.


Dividend buyers should really normally want to know if a) a company’s dividends are cost-effective, b) if there is a keep track of record of regular payments, and c) if the dividend is able of expanding. Initially, we like that the firm’s dividend payments appear perfectly protected, though the retained capital also needs to be efficiently reinvested. We had been also glad to see it escalating earnings, but it was concerning to see the dividend has been cut at minimum as soon as in the previous. Team 1 Automotive performs remarkably under this investigation, even though it falls marginally small of our exacting specifications. At the correct valuation, it could be a sound dividend prospect.

Market place actions attest to how very valued a reliable dividend policy is as opposed to a single which is much more unpredictable. Meanwhile, in spite of the great importance of dividend payments, they are not the only elements our viewers must know when assessing a enterprise. For illustration, we’ve picked out 3 warning indications for Team 1 Automotive that buyers should really know about prior to committing money to this inventory.

Looking for extra high-yielding dividend concepts? Try our curated listing of dividend stocks with a generate over 3%.

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